(...)Under the concept presented in Tuesday's report, the existing Security Council of Japan will be condensed into a smaller council comprising the prime minister and the three ministers, according to the report.

The finance minister was included in the council under an earlier plan, but that post was excluded from the latest report.

The special adviser to the prime minister in charge of national security will also attend the meetings. Other related ministers and the chief of staff of the Self-Defense Forces will join the meetings on an as-needed basis.

But the framework of the current Security Council of Japan will be retained because the NSC will discuss the National Defense Program Outline and other matters.

Something is very wrong here. I understand the reasoning behind the report's conclusions and for the most part agree with the plan.

The institutionalization of the post of Special Advisor to the Prime Minister for Security Affairs was probably a given, since a Council member had to become the permanent head of the National Security Council Secretariat.

What is interesting is the creations two new categories of Deputy Chief Cabinet Ministers: an Assistant Deputy Chief Cabinet Secretary (ADCCS) of Foreign Affairs and what looks a lot like Assistant Deputy Chief Cabinet Secretary for Homeland Security. These two individuals will be the NSC director's direct subordinates.

None of the current DCCSs (Shimomura Hakubun, Suzuki Seiji, Matoba Shunzo) have the background nor even an interest in security affairs. Establishment of the NSC would thus have to come after the passage of the enabling legislation and a Cabinet reshuffle.

It is also unclear whether the two new DCCS positions will supplement or replace current DCCS postings. My guess is that with Abe's love of councils, committees and extra-ministerial posts, the number of DCCS positions will rise to five from the current three.

The exclusion of the Finance Minister from the inner circle is more than a bit petty. This represents one more clipping of the wings of the Finance Ministry which, through its decades of arrogant, bullying behavior, built up so much resentment against it that politicians see both it necessary and popular (and, to top it off, nearly risk-free fun) to beat the MOF down one more time--this long after if has been stripped of most of its most fearsome powers.

Of course, the absence of financial brainpower from the deliberations of the NSC will mean that the blindness toward the international financial implications of Japanese domestic decisions will only deepen. Japan will have no "committee to save the world" prepared to handle a significant global financial meltdown. It may not even get to nominate a member to such a committee.

As for the staffing of the NSC, well, the report's authors seem to have kicked the ball to the sidelines:

(...)The number of personnel (sic) in the secretariat office is expected to be between 10 and 20 people (sic), with core members to be assigned as graded post officials. Uniformed Self-Defense Forces officers will be actively recruited as secretariat members, as will private sector experts and researchers.

Concerning the exchange of information with intelligence sections of government ministries, the report said, "Intelligence officers of the Cabinet Office will always provide necessary and appropriate information."

Hope triumphing over experience again, I'm afraid.

Later - Jun Okumura has mailed me pointing out that one of my sources, the English language text of the Asahi Shimbun online, contains a whopping error. He's right-- the Japanese original states that the deputies to the Special Advisor will be Assistant Deputy Chief Cabinet Secretaries (kanbōfuchōkanho), not Deputy Chief Cabinet Secretaries (kanbōfuchōkan).

Tuesday, February 27, 2007

Getting Asia right in this regard does not mean the imposition of U.S. values on the region, but rather encouraging an environment in which the region'sleaders define their own national success in terms that are consonant with U.S. political and economic objectives.

"But rather"?

How does "but rather" enter into it?

How is "encouraging an environment in which the region's leaders define their own national success in terms that are consonant with U.S. political and economic objectives" any different from an "imposition of U.S. values on the region"?

Except for the obvious difference that the "imposition of U.S. values on the region" is concise, clear and honest?

BEIJING: China's Foreign Ministry called on Tokyo on Tuesday to be more open about its military development and the status of Taiwan in its plans following Japanese demands for more information on China's arms buildup.

"It is very strange that Japan, with only one-twenty-fifth of China's land and one-tenth of China's population, possesses such a huge military expenditure. ... Meanwhile, it claims China is a threat," said Foreign Ministry spokesman Qin Gang at a news briefing.

"Can they explain their military development and action including putting Taiwan into their law on contingencies in surrounding areas and the so-called Taiwan Act?"

The Chinese government joins the DPRK in turning tables on the Government of Japan's overreliance on canned speeches.

Frankly, I have never understood the whole "China needs to be more transparent about its military intentions" demand.

What country's government is ever transparent about its military intentions and capabilities? Keeping the other side guessing is the number one way of ensuring the other side leaves you alone.

Of course, keeping the other side guessing when you really don't have anything is less than effective when your opponent is A) insane or B) a recovered alcoholic who hears God talking to him and who has a bit of a chip on his shoulder due to the looming shadow of an infinitely more talented parent.

Thursday, February 22, 2007

Kamei Shizuka, the former LDP terror, now maudlin tear jerking outcast pol with incredibly ugly hair and a voice like meat grinder, has something of a history of equating members of the former Mori faction with totalitarian dictators.

"What is significant is that they engage in alert and snap to politics. This desire for an atmosphere of loyalty arising out of standing bolt upright in a straight line, I mean, when did we suddenly become North Korea?"

A Nippon Television report including Kamei's dismissive remark is archived here.

This morning's Yomiuri Shimbun explored Kamei's reimagination of Abe Shinzō as Dear Leader.(I love the card flip, the uniform and the shoes--but I don't quite get the pigeon toes)

Courtesy: Yomiuri Shimbun

Of course, just when the party is starting to rock, Fukushima Mizuho plays spoiler with an invocation of Godwin's Law --which, hilariously for a Socialist, demonstrates a sad historical amnesia over a certain country's "Banzai! Banzai!" tableaux. She then compounds her faux pas with a paraphrase* indicating an agreement with Nakagawa Hidenao's basic point:

At a press conference, Social Democratic Party leader Fukushima Mizuho declared, "Japan is not the country of 'Heil Hitler!'" and "It has been revealed to all the world there is no respect for the Prime Minister. The PM's position is hopeless."*

Oh, I hope for her sake the papers are misquoting her.

------------------

* 「賢者が過ちを犯すことがなかったなら、ばかには立つ瀬がない。」 = "If wise men did not ever screw up, then the stupid would have no hope at all."

Bryan Walsh, Tokyo - Vice-President Dick Cheney may not seem like the most reassuring of people, but on his trip to Japan, which began on Feb. 20 and ends Feb. 22, that's exactly that he was tasked with doing: reassuring Tokyo that the U.S.-Japan relationship was still strong. Normally that wouldn't be a difficult mission. And today in a speech on board the aircraft carrier USS Kitty Hawk, anchored off Yokosuka Naval Base near Tokyo, Cheney declared, "Relations between our two countries have never been better than they are today." The problem is, that's not quite true.

Cheney's visit comes at a time of growing unease in Tokyo that the U.S. and Japan may be drifting apart — and North Korea is one of the main causes. While Japan under new conservative Prime Minister Shinzo Abe has favored maintaining a hard line against Pyongyang, the U.S. was seen by some here as backing down at the recent Six-Party Talks, which culminated in an agreement that will give North Korea up to 1 million tons in fuel aid in exchange for shutting down its nuclear program.

Significantly, Japan refused to contribute to the aid unless progress is made on its core issue, the fate of Japanese citizens abducted by North Korea in the 1970s and '80s. While the Bush Administration publicly supports Japan's focus on abductions, it didn't escape notice in Tokyo that the issue took a clear backseat to denuclearization at the talks — and that the U.S. raised the possibility of removing North Korea from its list of terrorism-sponsoring states, something Japan vociferously opposes. "Japan felt betrayed," says Toshimitsu Shigemura, a professor of international relations at Tokyo's Waseda University. If Washington ignores the abduction issue, he adds, "the Japanese public will have doubts about the vitality of the U.S.-Japan alliance."

I don't think "Japan" is that unhappy...and I don't think that Shigemura-sensei speaks for Japan.

Back in the 1990s, Shigemura-sensei was right about the abductees. Unfortunately, he has never managed to get over his having been correct at that time.

Most Japanese citizens think Kim Jong-il a nutcase and a menace. Most would advocate strong, severe measures against the DPRK, including a total cessation of economic relations between the two countries.

Most Japanese, however, would probably also agree that the abductees's families have far too much access to the airwaves (NHK television, despite not being directly subject to Suga Yoshihide's order, nevertheless needs to change its call letters to RHK--since the fall it really has become the Racchijikenmondai Hōsō Kyōkai) and to the Prime Minister's Residence (honestly, they must have their own Kantei IDs and quarterly kōtsūhi payments).

Most Japanese would rather have the DPRK's missiles and nuclear facilities under lock and key than continuing the game of holding out until a full accounting is made of what happened to those who did not return from the North (let's face it, if it is a secret the DPRK is not willing to reveal, it is very, very ugly secret indeed).

If you did a global replace to the article, transmuting the anthropomorphic references to "Japan" ("Japan" is unhappy; "Japan" feels betrayed) into the more leaden phrase "Prime Minister Abe and his close advisors and supporters"--then Mr. Walsh's report would be spot on.

Nationalism is a morbidly exaggerated patriotic feeling. It is dangerous not because it exploits love for one's own, but because it risks breaking into hatred for the other – as it almost always does. But nationalism can be rescued from this fate; there must be a shift from ethnic nationalism to civic nationalism. Pride must come not from being Russian, Jewish or Tatar, but of being citizens of a beautiful country, one that is free, successful, morally solvent and unique.

I do not know whether it is a studied affectation or just a habit--but the Prime Minister has a disconcerting way of staring slightly above and to the left of a person's head when he is trying not to appear bored.

You see it a lot when he is waiting for a reporter's question to end--or when others are speaking at public events where he himself is not required to speak.

This morning's Sankei Shimbun has a striking example of Abe lapsing into this "I must not look as bored as I feel" pose at the Kantei performance of Noel Paul Stookey's song for Yokota Megumi. Sadly, Sankei Web only offers a near cousin of the photograph.

Courtesy: Sankei Web

It is a really extraordinary little quirk, telegraphing not only "Amaterasu, I am so bored" but "Amaterasu, I am so bored and I must not look bored because of all the cameras pointed at me!"

I have to look for another example. A close approximation, but an engaged rather than bored version of the mannerism, can be seen in the campaign poster behind the PM in this photo.

Courtesy: Reuters

A minor quirk--but I wonder whether his handlers realize how arrogant and detached that upwary tilted, faroff gaze makes him look...or how long it will be until someone starts to parody it.

Don't get me wrong, I love Matsue to pieces. I would not mind living there...though if I had to make a choice, I would probably choose Hagi instead...or to be absolutely perverse, Dōgo in the Oki Shotō.

Still, there is little that is newsworthy left in the tale of Lafcaudio Hearn's brief stay on the shores of Shinji-kō. Too many other foreign residents have made far more important contributions to their communities and the country with nary a mention in the international media.

Given Hearn's fading relevance and resonance (a Caucasian male who lived in Japan, really dug traditional Japanese culture, married a Japanese woman and took up Japanese citizenship! Wow, how unusual!), Matsue's city fathers and mothers maybe, just maybe, need to figure out how to move beyond the fixation upon the peculiar resident of that little house.

Tuesday, February 20, 2007

LDP Secretary-General Nakagawa Hidenao decided he needed to put his foot down on recent ministerial puttings on of airs...and you gotta know that if it is upon you that Nakagawa Kanjichō puts his foot, it's gonna hurt.

So as to avoid getting stomped by the less-than-svelte Nakagawa, the entire Cabinet made a very fine showing of jumping up out of their seats and bowing deeply to the PM as he strode purposefully into the regular Tuesday Cabinet meeting this morning.

It seems that in recent weeks, certain unnamed ministers have kept their keisters planted in the Cabinet meeting room's comfy chairs as the PM has been making his entrances.

Seeing that this may (?) be a demonstration a certain contempt or at least a distinct lack of loyalty (chuseishin) to the Prime Minister, the order came down from high to show the PM a little R-E-S-P-E-C-T.

My only quibble with Okumura-san's presentation is that he does not underscore how fearsome Nakagawa Hidenao is. I watched Nakagawa walk through a room full of CEOs of Fortune Global 500 companies when he was just Chairman of the Policy Research Council. These CEOs of some of the world's largest companies and even some serving Cabinet ministers leaped out of Nakagawa's path, turning around and damn near curtsying to him in abnegation.

Monday, February 19, 2007

"This is absolutely not based on objective facts--and as it is based on the assumption that the Japanese government has not responded in regards to the comfort women problem, it is extremely regrettable."

Such was Foreign Minister Aso Tarō's response when asked in the Diet about the recent hearing in the U.S. House of Representatives on a bill calling on the Government of Japan to accept unequivocal responsibility for the plight of the comfort women.

I have pondering over what Foreign Minister Aso's "objective facts" (kyakkanteki na jijitsu) might be as opposed to, let us say, "facts."

My guess is that an "objective fact" is one where the perpetrators leave a written record of what they have done.

So damn you Suzuki-san, Tanaka-san and Naitō-san in Records & Accounting! If you had done your jobs better this problem would have solved itself!

I tend to believe that Abe's poll numbers have stabilized and that he will survive the July election. However, his tenure will probably be as unmemorable and dispiriting as those of the string of short-termers in the 1990s.

Frankly, seeing Foreign Minister Li Zhaoxing giggling, mugging and grinning on Friday like a dweeb who managed to score an impossible-to-believe date with a hottie caused me to feel more than my usual amount of apprehension.

A bubbly Li Zhaoxing and a promise of a visit from Wen "I am so not here" Jiabao. Oh my!

See what you can get if you just stop visiting 14 ghosts once a year for a few minutes?

Saturday, February 17, 2007

"The heavyset, bullet-headed Armitage is known for having a good head on his shoulders....That is primarily because he has no neck"

- William Safire

Valerie Plame identity leaker, champion curser and REALLY big man on campus Richard Armitage is back with his partner Joseph Nye (with probably lots of help, like last time, from the fingers of Michael Green) with another roadmap to everlasting Japan-U.S. happiness.

Except, of course, this time, nobody on the list of participants except possibly FJ is going to get bupkis in terms of a position in 2009.

Still, I've got to go now read the damn thing. I've glanced at the conclusions and my initial reactions are:

- Free Trade Agreement? Bwahahahahaha. Over John Dingell's dead body.

- Since when is Indonesia in charge of ASEAN?

- How is the U.S.-Japan alliance "well suited to strengthen and integrate national and regional efforts to address climate change"? Guys, the U.S. kicked Japan in the groin on this issue. The Kyoto Protocol, remember?

Friday, February 16, 2007

It will be interesting over the next few days to see how the Abe Cabinet and the LDP improvise off the relatively good GDP preliminary report.

Courtesy: Mainichi Shimbun

What will be the campaign talking points?

"Wow, through Prime Minister Abe's farseeing leadership consumer spending has soared to exactly the same level it was six months ago!"

"Damn, nothing can stop the beautiful people from building crap and investing in machinery!"

"Wow, our exports keep rising! Who could possibly have a problem with that? We are just the most awesome exporters in the world! Keep using chopsticks!"

"After years of cutting back, public investment is going up...because...because...I've forgotten why."

[Alternate] "Public spending is going up? There are local and prefecture-wide elections? This year?"

"The economy is doing great...but not that great. But then, the Bank of Japan is independent. Politicians are only representing their constituents. Yokota Megumi!"

"You ARE richer. Really. Unless you are poor. Why didn't you invest New Zealand bonds when you had the chance?"

"No, we DO have a plan that both closes the budget gap and does not raise taxes. Until September."

"Oh, the Democrats always saying, 'We have to wait until revised figures come out. Preliminary figures are almost always overoptimistic.' Let me tell you, maudlin, cockeyed, boot-strapping optimism is what made this country great! Didn't you see Always-Sanchō no Yūhi? Now that's nostalgia the way it used to be!"

Thursday, February 15, 2007

The wire services are all jumping up and down about the rise in consumer spending. Nice, up 0.7% in real, that is to say nominal, money.

Japan, the only advanced industrialized economy where real GDP is a complete, delusional fiction.

I tend to look further down the report and worry about the immense rise in private residential investment (up 2.3%). Like those of us in Tokyo and Aichi could ignore the forests of kōkyū jūtaku shooting up into the sky (Can you believe a 5559-story residential tower next to Musashi-Kosugi Station?)

Private non-residential investment--all that capex and all those great glass temples of commerce--has slowed a bit--but only after soaring like bird earlier this year.

Government spending also increased but only after falling like a stone during the last few months of the Koizumi administration (hints of a lessened commitment to fiscal reform, anyone?)

Also interesting is the quarter-to-quarter drop in imports, with negative growth in the nominal figures. This took place as the steep drop of the value of the yen in Q4 kicked European exporters in the gut. Before predicting serious trans-Eurasian and to a lesser extent trans-Pacific friction over Japan's weak appetite for imports, however, let us see how much of this drop can be attributed to falling energy prices.

Look today for a dipping dollar, a plummeting euro-yen rates, rising bond prices and Bank of Japan officials dancing naked on the Nihonbashi and kissing the sidewalk.

from 米のイラク新政策、理解し支持…衆院予算委で首相表明 ("The Prime Minister Expresses in the House of Representatives Budget Committee...that He Comprehends and Supports the New American Policy for Iraq") Yomiuri Shimbun, February 9, 2007.

Now I think I know what the prime minister is trying to say. What I am having trouble discerning is what he is actually saying.

"(The Government) expects that the effort will be undertaken in an effective manner. From the point of view that it is necessary to attempt to bring economic revival and security to this region, (we) comprehend and support (the American plan)."

Now given the Bush Administration's past record on security and economic revival in Iraq, that first sentence ("The Government expects...") represents the triumph of wishful thinking over experience.

It is the second sentence that has my head twirling about, though.

Is the Prime Minister following the White House line so closely that he thinks foreign policy is not a matter of winning or losing but whether one put in a "best effort" or not? "From the point of view that it is necessary to attempt..." is fine...but what about from another point of view, like "let's not get killed out there for no reason" or some other rational desire for self-preservation?

Or is this a sly way of giving only half-hearted support to the plan, on the order of:

"If we are talking about the need to do something, anything, to try to improve the situation in Iraq, sure we support the plan. However, from the point of view of believing the plan will actually be improving the situation on the ground, no, we do not support it."

Whatever the interpretation, one hopes that some day the "partial credit" warriors will be forced into a well-deserved retirement.

Feb. 12 -- Japan has never been known for a thriving feminist movement. The World Economic Forum ranks it 69th out of 75 countries in female empowerment. Tokyo is still awash with women wearing work uniforms that make them look like 1970s flight attendants.

The weakness of women's lib in the world's No. 2 economy may come as a surprise to Hakuo Yanagisawa. Japan's embattled health minister has been front-page news since describing women as ``baby-making machines'' on Jan. 27. You would think millions of Japanese women had suddenly discovered Gloria Steinem.

Even by the standards of Japanese politicians, Yanagisawa went too far. "I reprimanded him severely," Prime Minister Shinzo Abe told reporters after female lawmakers called for Yanagisawa's resignation. Yanagisawa, 71, apologized, further displaying his cluelessness by saying women were "people whose role it is to give birth."

What's more, Yanagisawa defined "baby-making machines" as women between the ages of 15 and 50. Was he suggesting that teenage girls do more to increase Japan's low birthrate? The man should resign, and now.

Dear William, Yanagisawa Hakuo's still on the job--if not on the ball, if you know what I mean.

Pesek has just about had it with Japan. Nothing works here, at least as far as he sees it. Women and children are not valued. Immigration is limited. Politicians are venal and narrow minded. Interest rates are too low, flooding the world's asset markets with too much liquidity.

1) stop worrying about future liabilities. Barring an invasion, the Japanese people, Japanese business and Japanese public servants will manage, somehow.

Corollary: children are not solutions to shortfalls in future social welfare spending, so stop referring to them as such. The difference between a person who considers women baby making machines and one who considers children the sherpas of future armies of rudely healthy retirees is not large. Of course, children cannot vote, so there is no electoral price to pay when one demeans them as "snotty little immature future taxpaying machines."

While I am airing out my grievances, somebody please convince me that Ed Lincoln, the person who in many ways is the reason why I keep this blog, has not sold out completely in an essay for this week's Newsweek.

With media polls showing approval ratings for the Cabinet falling from over 70 percent upon its inauguration four months ago to the lower 40 percent level, the administration of Prime Minister Shinzo Abe appears to be at a crossroads.

The plummeting popularity may be ascribed largely to failures in Abe's selection of Cabinet ministers and party executives. He appointed a number of his longtime friends as well as those who had contributed materially to his election as president of the Liberal Democratic Party. The prime minister's office and the Cabinet are packed with some of "the best students in class" who enjoy Abe's favor. There are no politicians in the true sense of the word....

Read the whole thing. Soon. The gang at The Japan Times puts material behind a wall too damn fast for their own good.

What I found particularly instructive was this passage:

The previous administration, which derived its strength largely from the personality of Prime Minister Junichiro Koizumi, pushed reforms in specific areas, such as the privatization of the postal services and the Japan Highway Public Corp. Koizumi practiced "theatrical politics," using grandiose political methods that appealed to popular sentiment.

By contrast, the Abe administration signifies a return to mainstream conservative politics, as shown by his unambiguous commitment to constitutional revision and education reform. Abe practices the "politics of the parliamentary Cabinet," centered on coordination and cooperation with the governing LDP.

Thus there are distinctive differences between Koizumi and Abe. If Koizumi was a presidential-type prime minister, Abe is a parliamentary Cabinet-type leader.

Presented this way (and I must commend the former Prime Minister, for it is a very artful presentation) Abe is merely choosing a style. Indeed, he is choosing an orthodox style. The operative word, with its powerful resonance even in English, is "mainstream"--the sense that Koizumi was not just different, but deviant.

This lulls the reader into accepting Nakasone's radical thesis--that the orthodoxy of Abe is a return to a comfortable and comforting normalcy--a normal ("Cabinet-type") administration for more normal times.

Unfortunately, outside the boundaries of Nakasone's reasonable presentation, is the uncomfortable and undeniable reality that "mainstream conservative politics" is what the people loathe. It is what they reject and been rejecting since 1993. There is little taste for such politics now, even for (especially for?) the reactionary side of the political spectrum.

Chikusho! Investors who put money into Fujishoji, a pachinko machinery maker, must have been cursing its miserable debut on Friday...

Now someone please correct me if I am wrong but is not the "C word" pretty much as offensive as one can get in Standard Japanese? To progress (regress?) any further into the wilds of profanity, you really have to have the plumb the depths of the regional dialects.

In my office, I "suggest" that the "C" word not be used. I make our most flagrant and frequent offender, when the mood to swear strikes him, say, "Chiku...shi Tetsuya!" instead.

Then again, one of the great charms of the members of the British upper crust is their ability to shift gears, enunciating a spritely, "Excuse me, but could you please just go f--k off?" when they wish to be left alone.

Thursday, February 08, 2007

...for the Democrat Party of Japan (DPJ), I would want to find out the answer to this question:

"What is it about Prime Minister Abe Shinzō that annoys you the most?"

If the results from Sunday's election mean anything, it is that the seriously annoyed floating voter is back on the warpath against the LDP.

The DPJ needs to take note.

For me, the answer to the question would be that Abe (and Nakagawa Hidenao is an unindicted co-conspirator in this) has allowed the reflorescence of the worst aspect of the pre-Koizumi LDP: the delaying of crucial policy decisions "until after the next election". One of the gifts that Koizumi gave Abe (and which Abe, during his apprenticeship as Chief Cabinet Secretary, should have picked up) was a wrenching apart of the policy discussion and implementation process from the political calendar.

Right now the country has two ticking timebombs set to go off--the revelation that the economy has been in a stall for over half a year and the need for a tax increase to fund government obligations. Action on or even honesty about these two issues is being deferred, in the case of the tax increase officially deferred, until September.

The voters see through these delaying tactics. Indeed, I think the voters feel insulted by the implications of the delay. "If the issues are so important, why don't we attack them now? Do you think we can't handle the truth?" would be the average voter's lament.

If someone would ask her, of course.

In order to profit from this particular annoying aspect of the current regime (there are probably so many others polling would identify) the DPJ does not have to tell the voters how it will deal with these pressing issues (Okada Katsuya tried that approach in the summer of 2005 and the party got blown away for his troubles). The DPJ leaders need only say that if the DPJ in power, it would face these issues, squarely, honestly...and not keep putting off the day of reckoning.

For in truth, there is always a "crucial next election" just a few months away...and real leaders don't keep avoiding problems.

Wednesday, February 07, 2007

Today's Financial Times has an interesting editorial calling on the the Bank of Japan to sell off some of its immense holdings of dollars.

(I think that in practice the BOJ and the Ministry of Finance would have to act together to convert BOJ's dollar assets into yen assets. Others know much better than moi about the technicalities. I defer to them.)

Given the generally comatose Japanese consumer, it remains political suicide for the Bank of Japan to raise interest rates (oddly, news of overall weak Japanese consumer spending seems to have failed to reach the desk of the first deputy manager at the IMF--but that is the subject of another post). Raising rates would benefit domestic savers and bondholders. However, it might also wipe out capital investment and urban real estate development, the two drivers of the current recovery (not that one can really say anything for certain about the effects of interest rates below 1%, which are well inside the "pushing on a string" zone of monetary policy).

As nearly everyone points out, BOJ independence is still in its formative years. The Bank's board cannot openly defy politicians, though the declining fortunes of Abe Shinzō must be wearing away at the formerly awesome authority of LDP Secretary General and fierce interest rate hike opponent Nagakawa Hidenao.

As a result, the yen is at a 21 year trade-weighted low, or rather a bit more when one considers, as Dr. Brad Setser has, the way prices have moved since the last time the yen was cheap:

...I calculated the cumulative inflation differentials (CPI inflation) between the US and Japan since 1998, and, if I did the math correctly, Japanese prices today are down 3% since 1998, while US prices are up 23%. I think that means that a yen/ dollar of 121 is about equal to a yen/ dollar of 152 in 1998 in real terms. It wasn’t that weak in 98...

Selling a some fraction of the BOJ's foreign currency reserve mountain would at least demonstrate to the Europeans that the BOJ cares--and it would lessen the political pressures on European finance officials to "do something about the value of the yen".

So why do I have my doubts that the BOJ will follow through on the FT's suggestion?

I can think of about 30 billion reasons.

That is at least the amount of money in dollars the BOJ earned last year from the interest on its foreign currency reserves. That is straight, stupid, keep-your-money in-one-place-and-not-even-think-about-it profit. That is not taking into account the valuation increase in the currency reserves from the increased value, as measured in dollars, in the euro fraction of reserves.

Take the interest income and the valuation increase in the euro portion, convert that total in yen and remit that sum to the Ministry of Finance...and man, you're talkin' 'bout earnin' the taxpayers some real money.

It probably too much to ask the BOJ to sell its foreign currency holdings in order just to put on a good show for a European audience.

First, if the BOJ does sells its dollar and euro assets, the market will send those dollar and euro assets right back to Japan in....ta dah...the carry trade.

Remember, the interest rate differential, the 4 percentage point or more difference in between the cost of borrowing money in Japan and the return one can earn overseas--the engine of the carry trade--will remain unaffected by the sale of the reserves.

Second, and I think this is the kicker, selling the reserves would deny the BOJ the opportunity to make money off of the interest rate differential it has created. As Dr. Setser notes in a whiplash-inducing aside:

Of course, the biggest carry trader of them all is the Japanese government. It borrowed a lot of yen to buy something that yielded a bit under 5% a few years back.

The biggest carry trader of them all...is the Japanese government.

What chance is there the BOJ boys and girls--and their counterparts at the MOF--are going to blow up their own deal?

Though I should hardly be surprised, given the number of my acquaintances who take the time to send nengajō, I won (like the above card illustrates) nada this year.

Had I bought my hundred cards and simply held on to them, I would have won at least 2 prizes.

Of course, the one really neat aspect of this year's nengajō storm was the funny (funny "odd" not funny "ha ha") way the heretofore spectacularly expeditious system of delivering New Years cards broke down.

A paranoid person, a Doubting Thomas would surmise that someone, somewhere was trying to demonstrate how quickly the heretofore unshakable Japan Post will go to pot under privatization...

Japan and Australia has (sic) preparing to sign a defence and security agreement. Australia's Foreign Minister, Alexander Downer, says it won't have the status of a treaty, and Beijing should not be upset, because the security deal is not aimed at containment of China.

What are the limits of the activities upon which Japan and Australia are agreeing cooperate?

More importantly, where is the public examination of this concept? The press seems bizarrely silent about what is a history-busting accord. A peremptory Google News search reveals this one analysis on the Chugoku Shimbun's and other regional newspapers's websites.

Cuts in public works reduces incomes in areas without meaningful industries!

High cost, luxury housing construction in high cost-of-living areas tends to attract high income earners!

Economic recovery tends to favor areas where there is meaningful economic activity!

Where there are few children and most of the adults work, per capita incomes are high!

And Prime Minister Koizumi and his sidekick Takenaka are bad people!

Please.

Less amusing is the graph of the differences in average annual incomes between the highest income municipality, Tokyo's Minato-ku, and the lowest, Akita Prefecture's Higashi Naruse Village.

However idiotic the political rhetoric, the difference in average incomes is stark--frankly, unless one lives in a paid-for home, growing a certain amount of one's vegetables and fruits, 2.11 million yen a year seems an impossibly small amount to live on.

If it were not for the caveat that many of those living in Minato-ku are fulltime workers without children (though from the visual clues the number of couples with children must be growing), I would be seriously concerned about a 5 to 1 ratio in differences in per capita annual incomes.

The government has to come to some decision on how the low-income municipalities are going to cope with the future. The problem is mind bogggling. These areas cannot continue to live parasitically off revenues taken from the core areas. At the same time, without government-derived incomes and new residents--even only temporary ones--these places will become dead zones.

The reemergence of not just relative but real rural poverty in an industrialized nation--the reversal of the arc of 20th century economic development--may be the one truly important story of the present day Japanese economy.

In the print edition (Sunday, February 4) of the article is a graphic of the top ten and bottom ten local administrations (自治体) by income. Tokyo's dominance at the top is no surprise (Minato-ku, Chiyoda-ku and Shibuya-ku are #1, #2 and #3...and Tokyo wards hold 7 of the top 10 places). The real shocker is #4, Okinawa's Ueno Township.

What the heck is in Okinawa's Ueno Township?

At the bottom, unsurprisingly, are a lot of Kyūshū local administrations (two in Miyazaki, two in Kumamoto and one each in Nagasaki and Saga Prefectures), two from perennial population loser Akita (the prefecture with the nation's highest suicide rate) and one each from Hokkaidō and Okinawa Prefectures (balance?).

From time to time I am more than a little sharp about the parasitic prefectures, as if there were something wrong with administrative units unwilling to keel over and just die already. It is hard to get individuals to leave their homes; frequently, the home is one asset a person possesses. We cannot all be happy as little consumers in our manshons on X level of sector N of a single vast, pulsating concrete metropolis.

The culprits here are the politicians. They could push matters in the right direction, any direction, if only they had a little nerve and a little vision. The rural districts are victims of a failure of the imagination at the top, not initiative at the bottom.

The Democratic People's Republic of Korea (DPRK) on Thursday urged Japan to hand over the remains of Korean slave workers born in DPRK and pay compensation to the victims' families.

The remarks were made in a statement issued by the Association of the Korean Victims of the Forcible Drafting and Their Bereaved Families, an official organization responsible for the slave workers issue.

DPRK accused Japan of serious human rights abuses and urged it to conduct investigations into the remains of the Korean slave workers, the official KCNA news agency quoted the statement as reporting.

The remarks came after Japan handed over the remains of more than 100 slave workers to South Korea...

I guess the Worker's Party people got irked that even peace poodle Yamasaki Taku cannot get off the Yokota Megumi express.

Thursday, February 01, 2007

Not that I am trying to instigate mass hysteria or anything...but shouldn't we be screaming and waving our arms around at the thought that Japan's battle against the spread of the H5N1 virus is being led by a former television comedian without any administrative or crisis experience who has been on the job for exactly 10 days?

Miyazaki Governor Higashikokubaru visitsthe site of the third outbreak of H5N1 bird fluMiyazaki Prefecture. January 31, 2006.Courtesy: Mainichi Shimbun

Especially when he channels Kan Naoto and engages in stunts like this?

Miyazaki Gov. Hideo Higashikokubaru wolfs down grilled chicken at an event to promote the prefecture's products at a Miyazaki hotel Thursday. Higashikokubaru, who is dealing with bird-flu outbreaks in his prefecture, said Miyazaki chickens are "good and safe." Source: The Japan Times

To be charitable, he probably really regrets this idiotic performance now.

Shouldn't someone be saying also that having the baseball spring training camps opening up as per usual in Miyazaki Prefecture is a really, really, really bad idea?

All those Softbank Hawks (Miyazaki City), Yomiuri Giants (Miyazaki City) and Hiroshima Carp (Nichinan City) fans, all those journalists...in their cars...driving into Miyazaki Prefecture, all around it...and out again...

For those hopelessly addicted to overheated Jieitai imagery, these fanvids will have to suffice....as tragically, in the switchover from JDA to MOD, the MSDF shut down access to their infamous "dancing sailors" recruitment video.